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Samsung challenges Apple Pay with LoopPay purchase

Firm will use magnetic secure transmission to take on iPhone's NFC technology

Samsung has acquired mobile payments specialist LoopPay as a way to provide its smartphone customers with improved mobile wallet features and to take on Apple Pay.

David Eun, executive vice president of Samsung's Global Innovation Centre, said that LoopPay's relationships with banks, card networks and merchants complement Samsung's position in the mobile payments arena.

"Through this deal we can significantly accelerate our mobile commerce efforts," he said.

The acquisition follows Samsung and LoopPay's existing relationship, in which Samsung joined Visa and Synchrony Financial to channel investment into the contactless payments specialist.

The magnetic secure transmission (MST) technology works in conjunction with LoopPay's app, which stores a user's card details allowing them to make contactless payments with a mobile device.

LoopPay's technology differs from that of Apple Pay, which is reliant on shops having access to near field communication (NFC) payment units.

LoopPay claims that MST is compatible with around 90 percent of existing payment terminals in the US, pointing out that Apple Pay works in less than five percent.

MST means that merchants can offer contactless payments without needing to invest in NFC terminals and supporting infrastructure, arguably giving Samsung an easy way to expand the contactless payment options in its smartphone portfolio.

Will Graylin, chief executive at LoopPay, said that the company's contactless technology "provides more value from card issuers and the merchants that serve them".

Graylin also explained that Samsung shares LoopPay's goal to create more secure smart wallets and improve the way mobile payments are carried out.

LoopPay will be an independent team under Samsung's corporate banner, and remain based at its Boston headquarters.

Further details of the acquisition were not revealed, despite V3 contacting both companies.

Samsung did not reveal how it plans to integrate LoopPay into its smartphones, but the firm could well showcase mobile devices with the payment capabilities at Mobile World Congress in March.